How Hollywood plans to keep prices up as movies go online

Digital downloads have broken apart the album and decimated major label music …

The movie business is often said to follow the lead of the music industry. Watch what happens to music on the Internet, wait a few years, and expect that the same things will happen to Hollywood blockbusters. Think of it as peering into the future, but without the Magic 8-Ball, Ouija board, or astrologer.

As content migrates onto the Internet, what happens to it? In many cases, it gets cheaper—even dramatically cheaper. This price compression effect has been catastrophic for newspapers, and it has whacked away a significant percentage of major label revenue from recorded music (although the music business as a whole remains exceptionally vibrant).

Given this reality, put yourself inside the mind of a Hollywood executive looking at the following two charts and see if it's possible to avoid heart palpitations. First up is the annual growth of compact disc sales, which throughout the late 1980s and the entire 1990s provided hitherto unimaginable wealth to the major music labels.

Not only did customers buy their old vinyl and cassette albums again on shiny plastic discs, but the labels essentially stopped selling the singles that were such a part of popular music back in the 1950s and 60s. The CD was a perfect way to deliver an entire album, and to command full album prices, even when it contained only a few hit tracks. The music fan who wanted Chumbawumba's "Tumbthumper" had better be prepared to cough up $12 for the full album. (Yes, I'm still bitter.)

Then, in the early part of this decade, the bottom began to fall out of the CD business, and this was the result.

By itself, the chart is not particularly terrifying. It could well be that the labels were transitioning to other revenue sources, or that a post-CD format was about to usher in a new golden age of even greater profits. As everyone knows, however, that's not (yet) what happened. Instead, the new post-CD format, digital downloads, almost immediately gutted album sales, returned us to the "age of the single," and through the magic of iTunes dominance established one dollar per song as the price for individual tracks.

The net result was a disaster for the major labels. Take a look at the second graph below, which overlays recording industry revenues with box office earnings and video game sales to show you just how badly music has been beaten up. The decline of the compact disc matches the overall decline in revenues quite closely.

Still inside the head of our fictional Hollywood executive? Good. Now imagine that you've watched the recording industry's woes for the last few years and have noted that, when content moved from the physical disc to the digital download, it was disaggregated, prices fell, and overall revenue plunged. Then you look at recent DVD sales numbers and see this:

A peak for DVD sales has already been reached; 2007 was the first year to see declines in total unit sales numbers. As someone whose job depends on making those quarterly revenue numbers go up, up, up, this certainly has to give movie executives pause. As films finally migrate in a real way onto the Internet, will the Internet once again exert its amazing downward pressure on price?

Not only did customers buy their old vinyl and cassette albums again on shiny plastic discs, but the labels essentially stopped selling the singles that were such a part of popular music back in the 1950s and 60s. The CD was a perfect way to deliver an entire album, and to command full album prices, even when it contained only a few hit tracks. The music fan who wanted Chumbawumba's "Tumbthumper" had better be prepared to cough up $12 for the full album. (Yes, I'm still bitter.)

A question to this complaint. Assuming for a second all the tracks were "hits". How could one discover that fact in this "break apart" new world? It seems to be the new movement is about reducing consumer risk. A laudable goal but with reduced risk also goes reduced chances of discovery. In other words the popular, safe choices eventually rule.

Now on to the story. Physical media will be around not only because the fast enough connection aren't ubiquitous but because people like to be able to have something to hold, to show that they actually bought something.

If they continue in this direction, they're trying to compete with free. That will not work. They have to provide their content in a manner that consumers want at a price they're willing to pay, or else it will be acquired elsewhere and they will get nothing.

I can download a DVD off BitTorrent in 2 hours. Less if I'm ok with a compressed avi. That number will only go down. You can't compete with free on price, you will lose every time.

Even more, you can't expect people to collect DVDs anymore. Why would I when I have access to Netflix's DVD collection? What is the incentive for purchasing a DVD ever?

In the information age, the value of content has gone down. We're in the middle of the reaction to the bursting of the "content bubble" where companies that were sitting on boatloads of cash are... well, no longer sitting on boatloads of cash. They need to find new ways to survive, and getting consumers to pay more for their content is only going to work if they control the price. Which they don't anymore, since "sunk cost of Netflix subscription" is essentially the alternative.

I can download a DVD off BitTorrent in 2 hours. Less if I'm ok with a compressed avi. That number will only go down. You can't compete with free on price, you will lose every time.

Strictly speaking they're competing with their own content made available for free, not some open source movies. Also at least in a physical world were reciprocal agreements are in effect and boxes are on shelves. A rather unambiguous message is sent when no one enters into them and unconsumed boxes remain on the shelves. Contrast the current message were no money changes hands and hence no voting with one's dollars and content is enjoyed in ever rising rates. Saying set the rates at whatever we feel else we'll burn your business down sounds suspiciously like another organization's tactics.

Originally posted by Exelius:If they continue in this direction, they're trying to compete with free. That will not work. They have to provide their content in a manner that consumers want at a price they're willing to pay, or else it will be acquired elsewhere and they will get nothing.

I can download a DVD off BitTorrent in 2 hours. Less if I'm ok with a compressed avi. That number will only go down. You can't compete with free on price, you will lose every time.

Even more, you can't expect people to collect DVDs anymore. Why would I when I have access to Netflix's DVD collection? What is the incentive for purchasing a DVD ever?

In the information age, the value of content has gone down. We're in the middle of the reaction to the bursting of the "content bubble" where companies that were sitting on boatloads of cash are... well, no longer sitting on boatloads of cash. They need to find new ways to survive, and getting consumers to pay more for their content is only going to work if they control the price. Which they don't anymore, since "sunk cost of Netflix subscription" is essentially the alternative.

It's not competing so much with free as it is with stolen.

I think that once legislation gets around to properly punishing P2P pirates, people will choose the legal over the illegal. For all that money people are spending at the theatre, so too does the budgets for making the films: http://www.slashfilm.com/2009/...e-movie-of-all-time/

Those movies cost hundreds of millions for the studios to make. Whether you like the films or not, that certainly earns them the right to charge what they want in whatever format they want. If folks don't like it, then they can steal and cheat the system or boycott it. But no one in their right mind should say that they don't deserve to have control over their own product. They spent big money for it. If you're not ready to spend for the product, or agree to their terms, then you don't deserve it.

We should be thankful to Hollywood for the quality that they put out - even if the actors and actresses aren't as good as they were in the Golden Age, nor are the writers, the special effects on the other hand are amazing. James Cameron is definitely an exception to the rule that Hollywood makes crap. I'm also looking forward to Tim Burton's Alice in Wonderland.

Of course, it may well be that the "recorded movie" industry (VHS, DVD, Bluray) was a minor aberration, letting studios make movie AFTER the movie left the theater. If that dries up, studios could always go back to making money at the box office (and perhaps PPV).

In fact, larger screens, better theaters, and IMAX all point to the studios realizing that they need to get butts in the seats...

Originally posted by Exelius:If they continue in this direction, they're trying to compete with free. That will not work. They have to provide their content in a manner that consumers want at a price they're willing to pay, or else it will be acquired elsewhere and they will get nothing.

I can download a DVD off BitTorrent in 2 hours. Less if I'm ok with a compressed avi. That number will only go down. You can't compete with free on price, you will lose every time.

Even more, you can't expect people to collect DVDs anymore. Why would I when I have access to Netflix's DVD collection? What is the incentive for purchasing a DVD ever?

In the information age, the value of content has gone down. We're in the middle of the reaction to the bursting of the "content bubble" where companies that were sitting on boatloads of cash are... well, no longer sitting on boatloads of cash. They need to find new ways to survive, and getting consumers to pay more for their content is only going to work if they control the price. Which they don't anymore, since "sunk cost of Netflix subscription" is essentially the alternative.

It's not competing so much with free as it is with stolen.

I think that once legislation gets around to properly punishing P2P pirates, people will choose the legal over the illegal. For all that money people are spending at the theatre, so too does the budgets for making the films: http://www.slashfilm.com/2009/...e-movie-of-all-time/

Those movies cost hundreds of millions for the studios to make. Whether you like the films or not, that certainly earns them the right to charge what they want in whatever format they want. If folks don't like it, then they can steal and cheat the system or boycott it. But no one in their right mind should say that they don't deserve to have control over their own product. They spent big money for it. If you're not ready to spend for the product, or agree to their terms, then you don't deserve it.

We should be thankful to Hollywood for the quality that they put out - even if the actors and actresses aren't as good as they were in the Golden Age, nor are the writers, the special effects on the other hand are amazing. James Cameron is definitely an exception to the rule that Hollywood makes crap. I'm also looking forward to Tim Burton's Alice in Wonderland.

Ever heard of term "Hollywood accounting"? They risk very little with every movie as the money comes from outside sources. Not to mention that it's not stolen it's copyright infringement and what is even worse is that it's the media companies that extended copyright to infinity and thus broke the social contract so I'm not sure in what kind of ethical universe can you screw one side and still think they have to keep to the agreement.

As someone whose job depends on making those quarterly revenue numbers go up, up, up

sounds like a physical impossibility to have that happen for decades on end...

quote:

Hollywood successfully convinced consumers to purchase a "high-definition" upgrade to the DVD standard

not to sure about this one. Sure, maybe the mediaphiles where "convinced", but the rest of humanity?

Im not sure what you are trying to say here? If by mediaphiles you mean those crazy people who have bought dvds instead of vhs in the last 15 years or so. Im sure that there are some people that still cling to their vcr's and old tapes of Mash, but im going to go ahead and say that a majority of consumers at this point have accepted dvds.

I enjoy buying my physical DVDs when Walmart puts them in their $5 bin. Sometimes their even marked down to as low as $3. I could care less about Blue Ray since my 60 year old eyes can't really appreciate it. As for being first to see it, it's new to me since I haven't seen it yet. So I'm patience. I also enjoy seeing them more than once.

I'm guessing there are millions more, of all ages, just like me. I don't pirate movies. I buy them only when their cheap. Most people don't have the knowledge or patience to rip a DVD or the morality (i.e. fear of being caught) to play with the torrents. There will always be the exception who will buy anything at any price. PT Barnum called them the suckers. They are not the masses.

Hollywood can price their movies at any price they like, but the marketplace will dictate sales. Hollywood and the music industry will have to lose their smugness thinking that they have the upper hand. The masses now have the advantage because the value of all content comes down in a media rich society. Nothing they do will keep the value up. Bygone are their cash cows.

Originally posted by ljocampo:I enjoy buying my physical DVDs when Walmart puts them in their $5 bin. Sometimes their even marked down to as low as $3. I could care less about Blue Ray since my 60 year old eyes can't really appreciate it. As for being first to see it, it's new to me since I haven't seen it yet. So I'm patience. I also enjoy seeing them more than once.

I'm guessing there are millions more, of all ages, just like me. I don't pirate movies. I buy them only when their cheap. Most people don't have the knowledge or patience to rip a DVD or the morality (i.e. fear of being caught) to play with the torrents. There will always be the exception who will buy anything at any price. PT Barnum called them the suckers. They are not the masses.

Hollywood can price their movies at any price they like, but the marketplace will dictate sales. Hollywood and the music industry will have to lose their smugness thinking that they have the upper hand. The masses now have the advantage because the value of all content comes down in a media rich society. Nothing they do will keep the value up. Bygone are their cash cows.

There is no putting it back into the box. My 2 cents.

I agree entirely with everything you said. I also wait for DVDs to hit $2 or $3 before I buy them. In the last 2 months I have purchased more than 100 films. Sometimes I even pay $10 if it's a film I've already seen and I know I'll want to see again. I think the marketplace is the right place to play the game, not illegal P2P sharing - which I hope is one day the bygone practice due to rigorous control.

What's even more entertaining is recognizing how much taxes would need to rise to house 40% of the population in prison, feed them, clothe them, and provide medical care. I'd wager taxes would be so high that nobody would be able to afford to buy content. Then the media owners would bemoan a complete loss of income. It's so entertaining to realize just how myopic content owners really are.

They are probably not targeting me, but I'll give my view anyway. I don't make very much money and I watch a lot of TV and a fair amount of movies. I can get dvd quality rips of movies and tv shows that I can watch on my TV for free: downloaded at 85-95% of the maximum speed possible. Where's the incentive to start paying for content I can enjoy exactly the same way without paying? They can charge me $1 for a 1080p direct download (with these prices I'll let an "official" torrent slide as long as they provide a chunk of the bw) and maybe $5 for a season of a tv show. They also have to make it available before a pirate copy of similar quality. Else, I'll just wait on random torrent sites torrent to complete. Even at $1 a movie and $5 a tv show season, I can't affourd all the content I watch- it's gonna be coming out of my going-out budget, and with *even* more time in-front of the TV (yes, it's necessary to spend cash when I go out, and when I'm not out I'm either at home surfing the net, reading- usually online and legitimately free, or watching tv) I'll be watching more content. Quite a conundrum for the movie industry if they want my $.

PS I *hate* physical distribution of movies/software. It's not the bulk of waste, but why add so much more packaging and plastic when it can be mostly electronic? 80% of Canadians live in cities- most have decent internet access. I can see physical distribution for the smaller or disconnected communities and for people who don't know how to use/ don't want access to the net. Anyone with a net connection can download and burn- cdrs, dvdrs and flash drives are readily available.

Originally posted by Nagumo:What's even more entertaining is recognizing how much taxes would need to rise to house 40% of the population in prison, feed them, clothe them, and provide medical care. I'd wager taxes would be so high that nobody would be able to afford to buy content. Then the media owners would bemoan a complete loss of income. It's so entertaining to realize just how *blinded by their own greed* content owners really are.

I'm gonna sound like a communist, which I'm not, but here goes: these content industries are trying to get much more than their fair share. As technology progresses their costs go down, not up. It's much cheaper to distribute music/movies/games electronically than to ship floppies/CD's/tapes/DVD's worldwide. Yet there hasn't been a real downward trend in prices. This can only mean that either they're getting bigger margins or possibly that we're all subsidizing pampered rock stars, actors and label executives.

As they try to keep DVD revenues high even in the fact of their inevitable decline, the studios also have a few positive advantages over the music business. One is the "Blu-ray advantage." Hollywood successfully convinced consumers to purchase a "high-definition" upgrade to the DVD standard, thus ensuring that its most premium product got another dramatic increase in file size—helpful if you're trying to stave off or at least reduce online copyright infringement. Music was not able to make this transition; consumers rejected new "hi-def" formats like DVD-Audio and SACD, and the industry was forced to jump right from the CD to the digital download.

Not really. You can d/l 720p and 1080p rips of BDROM's quite easily and at the same quality as the grossly bloated BD versions. H.264 MPEG4's at 720p with the DTS audio track will easily fit to a single layer DVD while 1080p rips need dual layer discs. Even so, 700MB AVI's (XviD) are still the most commonly snatched items, meaning super high quality isn't all that important for the majority of users.

What's sad is the entitlement Hollywood feels when looking at profits. Any other business would look at profits versus spending and adjust spending down when profits slipped. Not Hollywood, they spend more and more and think that people just have to pay. We don't. Unfortunately instead of letting the market decide, they want corporate welfare from the worlds governments rather than stop spending 300 million dollars on a single film (2012 had a budget of 262 million).

Add in that content owners broke the social contract by getting governments to extend copyright to ridiculous terms, and the people see no real benefit to your ownership or the products you produce. Especially when we see that the actual creators of most media aren't even the copyright holders, it's the studios that have all the rights. Look no further than the recent writers guild strike to see how much the corporation really think of the people who earn them billions each year.

I don't mind paying for content. I frequently do. But convenience is a major factor in where I spend my money. I'm in the military and when I deploy, I like having movies. My solution is usually to buy a movie and rip it to a HDD to take with me. That makes me a law-breaker. Why? Because I choose not to spend the extra 5 dollars for a sub-DVD quality copy of the movie I could buy? It's assinine.

I think the unspoken truth is that movie revenues are decreasing because there are a lot more terrible movies out there. For example, I paid to go and see Transformers and bought the DVD. I went to go see Transformers 2 and decided that I didn't want to purchase it. That's a $20 swing in revenue. Assuming there are other people like me, that could tally up to be a big loss.

I will pay for content- but these executives need to understand that quality and convenience are as important as price. They also need to realize that selling 10 copies at $5 is better than 2 copies at $20. Were I in their shoes, I'd say that offering more downloading options would dramatically increase sales numbers. Imagine if you could offer the movie via digital download the same day it was released in theater, but at a premium, and that when it was out of theaters, it was instantly available at normal price. No waiting for the DVD. Just instant access, and you could own it for life.

How many sales are lost by people going to the store, realizing they'd have to spend $20 for a movie they'd watch once? How many millions of dollars are spent on movies that are terrible? If the industry embraced the digital download and focused less on brick-and-mortar retails, they'd see some good results, I'd imagine.

Just look at video games. They are a relatively young form of media, yet they help pave the way in terms of digital distribtion. They have entire machines built without physical media in mind (the PSP Go). Books have gone the same way. Movies, books and games are dissimilar from music insofar as they are sold as whole units. Half of a movie is not worth buying, unlike how buying part of an album is often the best option. With this in mind, perhaps the movie industry should look at projects like the Kindle and the PSP Go and say "hey, why can't we figure out a way to distribute content for cheap so that it gets to more people"?

I'd buy probably 5 times the movies I did if the cost to quality ratio was better, and it was convenient for my life...and I'l bet you I'm not the only one.

I found that it is easy to dump cable, stop going to the movies and stop buying DVDs. The internet is loaded with entertaining content that is legal. Clicker.com will help you find most of it. Hulu and Miro are useful also. It is often not the same content as the big media, but you can fill that hole with Netflix. I have dropped my monthly cost for video entertainment to less than $10 a month and have more content than I can watch. My friends that spend $60 to $150 a month for cable/sat TV suddenly got very interested when I told them how much I save.

If they continue in this direction, they're trying to compete with free. That will not work. They have to provide their content in a manner that consumers want at a price they're willing to pay, or else it will be acquired elsewhere and they will get nothing.

You just contradicted yourself. Look at the example of bottled water. I can get water virtually free by walking into any place with plumbing. I still buy the occasional bottle of water though, because it provides me added value: convenience and a perceived higher quality.

This wouldn't be too difficult for content distributors. Sell me that DVD at a decent price (not $20 per movie) or sell me a digital version a la Amazon's DRM-free MP3s at a decent price.

One has rights only insofar as they can defend them. If the content industries now see that the power is in the consumer's hands, it's time for them to adapt to a new business model. I 'adapted' to CDs and DVDs when they came out by purchasing much of the same content on new media. Now that same content can be had for the price of the bandwidth it takes to deliver it. Time for the studios to adapt. Lower your prices and add value or they won't be able to compete at all.

The studios are trying to use their powers (lobbying legislative bodies and passing laws, implementing technological measures to prevent content duplication) to give them the upper hand. The consumers now have the power to consume their content without playing by those rules. It's time for the industry to recognize that and adapt to it.

Give me the ability to easily rip my DVDs to my home media server or to use digital content that I've purchased on different players and I could see my way to paying more (or anything at all) for that just-released DVD. Until then, I'll simply ignore the woes the content industry are crying about and keep using the content that I purchase or download as I see fit. I'm going to do it anyway and I don't mind the studios getting some money out of the deal.

quote:

PS I *hate* physical distribution of movies/software. It's not the bulk of waste, but why add so much more packaging and plastic when it can be mostly electronic? 80% of Canadians live in cities- most have decent internet access. I can see physical distribution for the smaller or disconnected communities and for people who don't know how to use/ don't want access to the net. Anyone with a net connection can download and burn- cdrs, dvdrs and flash drives are readily available.

If my choices for digital distribution include restrictive usage limits, then why would I choose that route? I will always have my DVDs and physical copies of games on my shelf. I don't purchase games on Steam either because I want to know that in five or ten years, I can just pull that game off the shelf and play it.

quote:

Now on to the story. Physical media will be around not only because the fast enough connection aren't ubiquitous but because people like to be able to have something to hold, to show that they actually bought something.

Originally posted by ljocampo:I enjoy buying my physical DVDs when Walmart puts them in their $5 bin. Sometimes their even marked down to as low as $3. I could care less about Blue Ray since my 60 year old eyes can't really appreciate it. As for being first to see it, it's new to me since I haven't seen it yet. So I'm patience. I also enjoy seeing them more than once.

I'm guessing there are millions more, of all ages, just like me. I don't pirate movies. I buy them only when their cheap. Most people don't have the knowledge or patience to rip a DVD or the morality (i.e. fear of being caught) to play with the torrents. There will always be the exception who will buy anything at any price. PT Barnum called them the suckers. They are not the masses.

Hollywood can price their movies at any price they like, but the marketplace will dictate sales. Hollywood and the music industry will have to lose their smugness thinking that they have the upper hand. The masses now have the advantage because the value of all content comes down in a media rich society. Nothing they do will keep the value up. Bygone are their cash cows.

There is no putting it back into the box. My 2 cents.

I agree entirely with everything you said. I also wait for DVDs to hit $2 or $3 before I buy them. In the last 2 months I have purchased more than 100 films. Sometimes I even pay $10 if it's a film I've already seen and I know I'll want to see again. I think the marketplace is the right place to play the game, not illegal P2P sharing - which I hope is one day the bygone practice due to rigorous control.

It’s rare if I spend more than £5 on a DVD these days. Additionally, it’s so easy to buy secondhand DVDs online from Amazon e-sellers that the average price of a DVD has to come down due to excessive supply versus demand.

As someone whose job depends on making those quarterly revenue numbers go up, up, up

sounds like a physical impossibility to have that happen for decades on end...

quote:

Hollywood successfully convinced consumers to purchase a "high-definition" upgrade to the DVD standard

not to sure about this one. Sure, maybe the mediaphiles where "convinced", but the rest of humanity?

Im not sure what you are trying to say here? If by mediaphiles you mean those crazy people who have bought dvds instead of vhs in the last 15 years or so. Im sure that there are some people that still cling to their vcr's and old tapes of Mash, but im going to go ahead and say that a majority of consumers at this point have accepted dvds.

dvd's was interesting to the masses for two reasons.

1. smaller size then vhs (you can get 4+ dvds in the shelf space of a single vhs).

2. no more rewinding.

blu-ray offer no improvements on this, it only offers extra small pixels. And for that one have to replace the player, tv and media.

These are products, but this is also a vital part of our culture. I despair that vital chunks of 20th century culture will be locked away in either old lossy formats like VHS tape or Laserdiscs (love that digital rot - but still the best medium in which George Lucas's first three Star Wars films can be found in their original form).

The issue is even more acute with the hundreds and thousands of films whose rights are ... murky. Where is Google Cinema to serve up the world's "public domain" cinema?

Should be simply rip everything we own - and rent - to a hard drive and store local copies in perpetuity? Frankly, I don't trust the Library of Congress or the British Film Institute or the equivalent body in each country to properly archive everything. We need a Library of Cinema that receives a pristine print (or digital files) for each and every film released. And then that material needs to be made available to scholars and the public in a timely fashion.

The insane copyright laws and Hollywood's insatiable greed will eventually destroy **the** essential artistic medium of the 20th century if we don't take active steps to preserve - and disseminate - these films.

The insane copyright laws and Hollywood's insatiable greed will eventually destroy **the** essential artistic medium of the 20th century if we don't take active steps to preserve - and disseminate - these films.

Eventually, more like already has. Look at Disney's limited releases of films that are more than twice my age. After their release window is up, the film goes back to the Disney vault. Current copyright clearly breaks the social contract between creator and consumer. Better yet is how the DMCA killed fair use. Between the DMCA and copyright the public domain really doesn't exist any longer. Next up, ACTA.

The decline of the recording industry should also be plotted against cocaine abuse for completeness. Think of all the poor drug lords! How will they make their money now? It's not like game makers are quite into the highs of excess. Well, except for Activision and Infinity Ward. They're buried under a mountain of snow.

There is one difference though with the movie compared to music industry, in that an album is made up of let's say ~12 distinct songs on average. With iTunes you can cherry-pick songs you want. With a movie, there is no point in cherry picking scenes - that just doesn't make any sense.

So in a way, movies are still selling "the whole album", but in this case they either get your money or they don't - there's no "partial" compensation for the bits that are good vs the ones which are not so good.

The devaluation of the "creativity" industry and content creation is inevitable as the cost of duplication and distribution goes towards 0. The only solution that's clear to me (maybe it's because i am canadian) to ensure that we continue the quantity *and* quality of media production we've had in the 20th century, is centralized subsidization of production.

This can be done in a variety of ways:

A explicit tax (such as the canadian CD-R tax imposed on every single canadian)

For the last one, there are a lot of room for imagination how the new economy could be. For example, imagine the organization will have profit share all the money made from the "franchise" equally shared amongst the members in a co-op fashion. Alternatively it could be a bidding, where top bidder gets certain rights to own certain copyright of the character... etc etc. The hollywood industry should look into the possibilities here instead of always trying to find yet another DRM mechanism that is doomed to fail.

Luckily not every country is like mine, Malaysia... If you rely movie revenues in Malaysia, you're dead... You can make money only from cinema, stores nationwide sold pirated copies and cops don't even care...

Originally posted by *SECADM:The devaluation of the "creativity" industry and content creation is inevitable as the cost of duplication and distribution goes towards 0. The only solution that's clear to me (maybe it's because i am canadian) to ensure that we continue the quantity *and* quality of media production we've had in the 20th century, is centralized subsidization of production.

This can be done in a variety of ways:

A explicit tax (such as the canadian CD-R tax imposed on every single canadian)

For the last one, there are a lot of room for imagination how the new economy could be. For example, imagine the organization will have profit share all the money made from the "franchise" equally shared amongst the members in a co-op fashion. Alternatively it could be a bidding, where top bidder gets certain rights to own certain copyright of the character... etc etc. The hollywood industry should look into the possibilities here instead of always trying to find yet another DRM mechanism that is doomed to fail.

I am also Canadian and I think you are missing a single massive one (and the most likely to be successful): new business models. As you said, the cost of distribution and duplication is pretty much approaching zero for the content. When you have a product that has those attributes, it opens up a whole new world of business models that takes advantage of those aspects. I don't think a new taxes, laws is necessary (though grassroots would be parts of new business models, and currently there are many new examples). Taxes/laws only delay the inevitable massive change that has come with the Internet and information age.